This is my translation of the first half of this post by chenglap on a Taiwanese forum. I think it’s a strong rebuttal to the argument (which many people share) that HKers should throw all their effort into making money and not get involved in politics.
You misunderstand. The importance of Hong Kong, when you come down to it, isn’t its substantive “economy”; it’s the liquidity of transactions there. Hong Kong is indeed a major economic city, but not for economic reasons: for political ones. Not even Hong Kongers themselves understand this. Hong Kongers commonly believe their value, and the reason they’re rich, comes from their understanding of economics and how to do business. On the contrary, Hong Kongers don’t really understand economics, and something else is the foundation of Hong Kong’s value: Hong Kong’s independence.
If you keep your eyes open, you’ll discover that all Western systems separate Hong Kong and China and treat them differently. Obviously China cares a lot about this, so it always demands that the word “China” be appended to the name “Hong Kong.” You won’t see them doing that with Shanghai or Shenzhen.
I’m not saying Hong Kong is an independent nation. I’m saying Hong Kong’s value is in its independence in external affairs, toward the world outside the ethnic Chinese community, that is, in the eyes of the world.
To become a financial center, having a big economy is just an entry ticket. Global credibility is the core question. To put it bluntly, it’s a question of how chaotic local governance is. Some places produce oil and diamonds and are very wealthy, but that doesn’t mean they can become economic centers. If you don’t have a government and legal system that meets international standards and is globally recognized, you simply have no way to guarantee the safety of the assets kept in your city.
Hong Kong is trusted because its systems are all independent from the People’s Republic of China. It has an independent currency and independent financial system. It follows the UNCLOS. It has a different judicial system than mainland China, one with the same source as the U.S. and U.K. It basically preserves separation of powers, so the executive cannot control judges’ legal decisions. It has a citizens’ jury system, lawyers, and a legal system that are all recognized by countries following the U.S.-U.K. framework.
Hence, companies are willing to line up and take a number to put their assets in Hong Kong, and extend credit there, -not- because Hong Kong has a “good economy”, but because they believe that Hong Kong will protect these things. The courts are the defender of everything. No matter how good the economy is, if the government can seize your assets at will there, and the courts that are supposed to defend you are on the government’s side as well, then that place is a “paradise of risk” and can never become a financial center. Finance is built on credibility.
Unless East China undergoes major governmental change, Shanghai will never have the conditions of a true financial center, no matter how much it develops. It won’t have its own currency, its own financial network, its own laws, nor credibility, because its credibility is equivalent to the People’s Republic of China’s. Chinese judges are appointed by the Chinese government. They don’t have independence. Foreign businesses that have business disputes in China with Chinese businesses do not believe that the courts there will protect them.
If Shanghai’s legal system cannot regulate the government, and the government can do whatever it wants there, independent credibility cannot be built there.
When Shenzhen was made a Special Economic Zone, the architects considered this point and thought about establishing a “Shenzhen Dollar”, and midway through seemed to want to strengthen the area’s autonomy as well. This is because they realized that the trust placed in Hong Kong stemmed from its autonomy, and from the government not being able to do whatever it wants there. However, Shenzhen was unable to win these rights. Hong Kong has the Internet domain .hk, and Taiwan has .tw, but could Shenzhen have .sz? Sadly, no; that’s Swaziland.
Through investment in industry and cheap labor, these cities can develop better economies than Hong Kong and have higher commodity prices, but how could they build independent credibility or a financial system that isn’t controlled by the government? How would they create an independent judiciary? It’s not that Shanghainese and Shenzhenese aren’t as hardworking or talented as Hong Kongers; they are, actually. But the systems that have already been established there stem from political issues and their issues cannot be resolved simply by making more money.
Outsiders don’t believe in Chinese Hong Kong’s economy; they believe in its credibility. Obviously, many often say that if you have strong fists you don’t need to defend your credibility. Yes, you could then shout at your people that you can do whatever you want and they can’t stop it, but foreigners won’t go for that. The business environment would be like a casino where you could win money easily but couldn’t leave with your winnings.